Town Hall 7/17/06
Forum Link: Announcement Post Forum Link: Transcript Post Town Hall with Lawrence Linden Topic: Economics 07/17/2006 6:30 PM PDT ---- Jeska Linden: Hello everyone and thank you for coming to the economic Town Hall with Lawrence Linden! Jeska Linden: First just a few tips for best enjoyment of this Town Hall. Jeska Linden: We'll be starting with a basic introduction about the new economic changes. Then Lawrence will be taking some questions. If you'd like to ask a question, please join the group Linden Town Hall Questions and ask in there - this is where we'll be pulling. Jeska Linden: questions from. Jeska Linden: Questions will be answered, as time permits, in the order they appear in the chat. Jeska Linden: Please don't submit your technical support questions, as they will be skipped over. Also, please try to keep your questions as concise as possible to allow the best flow of conversation. Jeska Linden: Also, if you've joined us here in Pooley, please try to keep your IMs and offers of friendships till the end :) Jeska Linden: Lawrence, take it away! Lawrence Linden: Welcome everyone, thank you for attending Lawrence Linden: Today we announced three things; a stipend change for new Premium accounts, the commencement of L$ sales by Linden Lab, and some additional, public LindeX "circuit breakers" Lawrence Linden: I'll summarize these and talk a bit more about the longer term. Lawrence Linden: For new Premium accounts the weekly stipend is reduced from L$500/week to L$400/week. Existing Premium accounts continue to receive L$500/week. Lawrence Linden: We will begin selling L$s on LindeX. Until otherwise announced we will be using an account that is at the Currency Trader 2 tier, and restricting our sales to less than 5% of LindeX volume for the preceding 30 days. Other restrictions will apply Lawrence Linden: to the trading, please see the announcement for more details. Lawrence Linden: We are also adding automated market halts. Should the market move too much in one 12 hour period the market will automatically shutdown until it is restarted. The halts begin at a 10% market move and a suggested one hour cool down. Larger market Lawrence Linden: moves will result in longer cool down periods or other reprocussions. Lawrence Linden: You can find more detail in the announcement. Lawrence Linden: The primary motivator behind these changes is to get to a point where the L$ sources are dynamic instead of having a fixed ratio to the number of residents. This will make it easier to balance the market Lawrence Linden: input and output and we hope will have a beneficial effect upon exchange rate stability. Lawrence Linden: That wraps up my summary. Lawrence Linden: Let's move on to questions. Jeska Linden: Ok, I've got questions :) Jeska Linden: Don't forget, join the Linden Town Hall Question group to ask Jeska Linden: FlipperPA Peregrine: The L$ is clearly a brilliant micropayment system: not electronic CC fees and such, and a nice way to conduct low-cost payments between residents. When can we expect less nonsense about this, and just get to the fact... Jeska Linden: you've developed a brilliant micropayment system. How about showing us the REAL cost in US$ or any country's local denomination as determined by the world's market? PS: MORE FRICKIN' SINKS! Someone at LL needs to attend the Greenspan college of Econ 101 Lawrence Linden: There's a project in progress to start preparing the web site to handle displaying costs that would otherwise be displayed in USD in other currencies. I don't know when it's scheduled to see the light of day, but Lawrence Linden: it's being worked on right now. I'm not aware of any plans to display anything other than L$ directly in the various parts of the viewer that deals with micro-payments. Perhaps the currency buying dialog will be updated, but Lawrence Linden: beyond that I can't speculate about at this time. Jeska Linden: Alenzia Epsilon: If someone cancels their premium account, then reopens it, will they recieve 400, or 500 a week? Lawrence Linden: I think they'll receive L$400/week... what matters is when their last transition from not being billed to being billed by Linden Lab for a Premium occurs. Jeska Linden: History Rust: Are the effects of large scale land speculations affecting the economy adversly? Lawrence Linden: I can speculate, but that's really not appropriate. What I will say is that land sales make up a significant part of the Second Life economy so it's quite possible for land sales cycles to effect other parts of the economy and other indicators like the Lawrence Linden: L$/US$ exchange rate. Jeska Linden: Katt Kongo: Most content creators rely on the ability to sell their Linden Dollars so that they can earn a living. What effect will the fact that LL is selling $L have on that ability? Lawrence Linden: I don't expect our currency sales to have a significant impact upon the exchange rate. We're restricting sales quite a bit, and for the forseeable future there'll be a human making the trading decision. One of the highest priorities for that human will Lawrence Linden: be to make trades at rates and times that they expect to make a minimal impact in the exchange rate. Lawrence Linden: Just to reiterate the volume that we'll be trading is very very small compared to the monthly LindeX volume. To put specific numbers to it, last month's total LindeX volume was over US$1,000,000 Lawrence Linden: and we'll be selling less than US$10,000 per 30 days to begin with. We have no desire to shoot ourselves in the foot so I don't expect our exchange volume to ramp quickly enough to impact the exchange rate Lawrence Linden: in a measureable way. Jeska Linden: Malin Arizona: Are there any plane to revive economic development on the mainland? Lawrence Linden: We anticipate that the new group tools that are due in release 1.12 will have a positive impact upon the mainland economy. Also the continued expansion of the southern continent should help continue to fuel Lawrence Linden: innovation on the mainland and provide additional opportunities. Jeska Linden: Harlequin Salome: When is LL going to decide if they want Second Life to be Resident Run or Linden Controlled? Lawrence Linden: I don't expect Second Life to ever be fully at either extreme, I think of it more as an on-going partnership. There are lots of opportunities for Second Life to benefit from more Resident Leadership, and I believe Lawrence Linden: that likewise there are this that as a corporate Linden Lab is better suited to for Second Life. In the long run, I think we'll generally be more biases towards encouraging the Residents in their endeavors when possible rather that doing everything Jeska Linden: Please join the group Linden Town Hall Questions to ask questions Lawrence Linden: ourselves. The whole doing-it-ourselves thing really won't scale to the future we see for Second Life. We will have to share the load where we can out of necessity and desire. Jeska Linden: Newfie Pendragon: Can you explain how, being the 'mint' of L$ in SL, that LL is creating a large conflict of interest scenario by now selling their own L$ on LindeX?Or at the very least a serious undermining of trust by those who dont have their... Jeska Linden: own infinite supply? Jeska Linden: You can also IM your question to me directly if you're out of groups, I'll add them tot he queue Lawrence Linden: From that perspective we've been minting and selling L$ in the form of stipends for years now. This is just a migration to making the valuation of those L$ more rational. We're doing our best to be as open about the process as possible, Lawrence Linden: you're going to be able to see the total L$ sales by Linden Lab updated daily, we're telling you all what the limits are for our sales in terms of both L$ sinks and LindeX market volume. Jeska Linden: Seonaid Barrett: Does Linden-traded Lindens trade at market rate, or at a fixed target rate? Lawrence Linden: It will be at market rate. There is no "target" rate. The directives for sales will be "operate within the announced limits", "sell when the impact on the market is likely to be minimal", and lastly "sell about how much we're limited to selling in a Lawrence Linden: given 30 day period" with less emphasis on that last directive. We've seen the problems that rapid exchange rate moment can cause and we'd prefer not to see that again. Jeska Linden: Rraven Moonlight: Is there to be a reinstatment of assisstance for those wanting to create quality content in SL? Cause cutting stipend is not helping us at all. Lawrence Linden: just to clarify in that last statement, I'm suggesting that we're likely to err on the side of selling substantially less than what our Currency Trader tier would allow if we feel it's necessary. Lawrence Linden: no one to that last question... Lawrence Linden: I don't have a solid answer, be there are some programs being design now that may be a boost to the creators on exceptional content. I haven't been involved in that so I can offer no details. Jeska Linden: e Brodie: Lawerence, why are there both positive methods to control the economy (circuit breakers, limited injection of funds) and world changes to premium stipend (a motivator for premium accounts) in the same economic change? Not everyone will want to Jeska Linden: buy money Jeska Linden: That's from Ice Brodie btw Lawrence Linden: There part of the longer term plans. We expect to move away from stipends in the long term and towards systems that are more dynamic for introducing L$ into the economy. Thus with this announcement we're announcing some of each. Right now, Premium Lawrence Linden: account holds are buying the possibility to own land, and a regular alotment of L$. That's not that different from buying L$ on demand. We have been tossing around the idea of allowing Residents Lawrence Linden: the option to setup recurring LindeX market buys on a customizable schedule. If there are enough residents would prefer getting their L$ in a way that resembles a regular allowance, we can certainly provide for that in the future. Lawrence Linden: This is no way a commitment to that feature at this time. Jeska Linden: Beau Perkins: Please explain how LL putting more money into the Market by producing L$ and selling it can fix the economy. Also what did Philip mean back when Lindex open by "LL will not be selling L$"? Lawrence Linden: That's not what we're suggesting, what we are suggesting is that by making the L$ injections into the economy more proportional to demand by offering it on LindeX we see the two-fold benefit of additional exchange rate stabilzation through Lawrence Linden: adjusting sell-side pressure a bit to match demand, and by helping ensure that we don't run into over supply situations like we're very vulnerable to right now with the such a large part of the L$ sources Lawrence Linden: coming from fixed stipends. Lawrence Linden: If you provide me with more of Philip's quote for additional context I might be able to speak to that additional point. I think the reality of Linden Lab as a corporation is that when we see opportunities to improve Second Life we need to take them Lawrence Linden: and sometimes that may mean altering our stance of a given subject. In this case we're trying to improve the economy in a way that we expect will benefit us, you and Linden Lab in the long term. Ctarr Huszar: by letting in hundreds of free unverified accounts thats causing havoc through out the grid Lawrence Linden: I believe that we're sticking to the spirit of such a statement by pre-announcing, selling less than we take in as sinks, doing this to strengthen the economy, not as some cash-cow. Lawrence Linden: On a related note, LindeX isn't a huge income generator for us, in fact overall we lose a little bit of money on it eahc month due to fraud. But we believe that it benefit Second Life enough to justify the loss, and of course Lawrence Linden: we continue to improve our tools to combat fraud. Jeska Linden: Gigs Taggart: How will Supply Linden deal with the lag that all markets have. A sell in a strong linden market can deepen an impeding dip. What methods of dealing with potential instability of "flying by the artificial horizon" will there be? Lawrence Linden: well intially Supply Linden will effectively be one of my alts. I watch LindeX very closely and have gotten reasonably proficient at predicting the market movement. I'm going to be doing my best to "tread softly". Of course I have dream of someday Lawrence Linden: making an efficient automated trading program that optimizes for excahnge rate stability, but such a project is likely to be a long way off. For the forseeable future it will be myself or another LindeX obsessed Lawrence Linden: Linden at the reins of the trading. Jeska Linden: Virtual Commons: My biggest concern with reducing stipends is a possible increase in stratification of levels. What is being done to make sure that all residents have the opportunity for a positive experience regardless of additional L$ purchasing.... Jeska Linden: power or skill? Lawrence Linden: There are a lot of recently released and in-development that are likely to have a positive impact. For example, improved search capabilities should improve consumer efficiency, letting Residents find the good and services they desire at the best price. Lawrence Linden: There are other things like introducing buying into the viewer that should also be making the L$ buying process more accessible. Jeska Linden: Samuel Bishop: I listened to Phillip Rosedale in either the may or june town hall and he refused to answer the question: Is it not true LL recieves a monetary gain from selling the money that is meant to stay in a pool after paying for group fees and up Jeska Linden: ...uploads and such? Lawrence Linden: Yes, from one perspective were are effectively selling some of the sinks now. Lawrence Linden: As for the "meant to stay in a pool" part, the things we're changing are basically the economic controls we have at our disposal to do our part to imrpove the economy. I think we're seeing a gradual shift in thinking as Second Life matures and our Lawrence Linden: experience matures as well. All these factors change over time, and we have to adapt to the changes. Focusing on taking money out of the system as sinks was one area that had been focused upon in the past, but the Lawrence Linden: perceived value of adjusting the sources has surpassed that for the time. So right now we're working on the sources part of the equations. There are some future plans that are likely to adjust some of the sinks. Lawrence Linden: When the time is right we'll likely make additional changes. We're striving to make balanced changes when we can, but also trying not to turn too many knobs at once. Jeska Linden: Chrischun Fassbinder: How destructive are these 'circut breaker' conditions going to be when used by particular individuals who wish to shut the market down, by driving a panic as a switch, for their own manipulative gains? Lawrence Linden: That is exactly why I have no intention to reveal the nitty-gritty details of exactly how the the holds are triggered or exactly what actions will be taken. The general terms in that part of the announcement are intended to not reveal enough information Lawrence Linden: for the market holds to be gameable. We do have a process prepared and do know how we intend to respond to various market conditions, but that's a dangerous thing to fully reveal. So we had a look at what Lawrence Linden: various first life markets say about their holds and crafted a similar statement tailored to the particulars of LindeX. Jeska Linden: Gus Plisskin: Do you expect more content creators to work for RL$ instead of L$ because of the changes? Lawrence Linden: As Second Life grows there's evidences that there's more and more first life interest in Second Life. Many of the people and organizations taking an interest in Second Life need the help of content creators. It seemed reasonable to expect that some Lawrence Linden: content creation will be done as part of first life contracts and paid for in various currencies. I don't think it would be a stretch to guess that portion of the overall content creation will comprise and increasing portion of the whole Lawrence Linden: for a while. Lawrence Linden: as for the impact upon the existing flow of in world commerce with a more stable L$:US$ ratio there should be no great reason for folks who use US$ in their first life to have a great desire to index their L$ prices against the US$. For Residents Lawrence Linden: with other native currencies they may see a difference balance of equations as the US$ moves against their native currencies. Jeska Linden: Greggy Trilam: How would this Econmic change for the little guys? (people who don't make big transaction and use SL more for fun then a Business.) Over the L/ US Exchange rate will SL be Affordable for those NON business people of SL? Lawrence Linden: Compared to the cost of maintaining a SL capable internet connection and a SL capable PC the cost of some L$ spending money is relatively low. As a form of electronic entertainment the costs can be quite favorable. Lawrence Linden: The reduced stipend for new Premium accounts could be more than made up for by a US$2.00 LindeX purchase each month. And if you were to compare SL to an MMO with a monthly subscription fee, I think you'd still find a moderate amount of L$ Lawrence Linden: to be quite inexpensive in comparison. Lawrence Linden: And of course if you're already paying for the computer and internet connection for another reason the costs of SL as a casual entertainment source should compare vary favorably to many other forms of commercial entertainment. Jeska Linden: History Rust and Malin Arizona ask: Is there a target rate between L$ and USD, or will the market be allowed to evolve totally on it's own? Lawrence Linden: There is no official rate target at this time. We're focusing on exchange rate stability. Sometimes that means letting the market make corrections to get closer to a rational value, other times that means countering changes in exchange rate Lawrence Linden: with changes to economic inputs. Lawrence Linden: Which is a somewhat roundabout way fo saying the sometimes it's better help move the rational value toward the current exchange rate than vice versa. Jeska Linden: Stroker Serpentine: Can we expect quicker turnarounds on processing credits through PayPal? what do we get for 3.5% and $1? Lawrence Linden: I'm building a response time reporting page for the PayPal processing so that we can better track our performance. We're also putting more effort in the the automation project, and we're also building a business case to apply more human effort to the Lawrence Linden: necessary tasks that are part of processing PayPal payout requests. Lawrence Linden: So yes, we hope to improve the response times. Right now we're averaging about 3 days (note days, not business days... I haven't finished adjusting the report to cound business days). Jeska Linden: Ok everyone, we've gone way over (Yeah Lawrence!) - we'll go till 8:30 Jeska Linden: So time for a few more quick questions in the queue - sorry if your question was asked and we didn't get to it. Jeska Linden: we will have another Town Hall tomorrow morning. Jeska Linden: Salazar Jack: Will the Lindens being sold by Linden Lab be newly minted ones or Lindens that are collected through sinks? Lawrence Linden: The answer is rather subjective, but since we are limiting Supply Linden to selling less than the past 30 days worth of sinks, you're free to think of it that way for now. From a techinical standpoint, I will wave a magic wand and L$ will appear in Lawrence Linden: Supply Linden's account. To better understand the long term strategy it will probably be best to tink of them as newly minted. That may help reinforce the idea that we're shifting Lawrence Linden: towards more of the L$ supply coming from dynamic sources such as these L$ sales. Jeska Linden: Vestalia Hadlee: Since June 1st, the SL population has increased an average of 2,076 per day. To better gauge the impact of the stipenend reduction, what percentage of the current influx become premium members? Lawrence Linden: I'm not sure. There's been a large increase in premium sign ups as the overall influx of Residents have increased. We'll look into adding it to the Economic Statistics page. Jeska Linden: Ok, last one - Jeska Linden: Caveman Dunderdale: In terms of being the 'mint' and the 'government' of SL as LL in effect is, has LL considered selling treasury bonds and allowing other SL residents to sell bonds in a bond market, to help insure the "full faith and backing of the LL Lawrence Linden: It's been considered, but not something that made sense for us to act upon the last time that it was considered. Jeska Linden: Thanks for coming out everyone. Torley Linden: :) Jeska Linden: Sorry we didn't get thru all of the questions Jeska Linden: But we'll be back here at 9am SLT tomorrow to talk about the same topic. Jeska Linden: Also, watch teh forums for a transcript of the event. Category:Town Hall Logs